Offshoring is the practice of locating some of a company’s manufacturing, services, or other processes in a country other than the country where the company is based. Offshoring is typically done to access lower-cost labor resources, labor resources with specific skills, and infrastructure, such as manufacturing plants.

In Tennessee, as in other states, offshoring is not directly regulated by state statutes, but it is influenced by federal laws and international trade agreements. Companies in Tennessee may choose to offshore parts of their operations for various reasons, including cost savings and access to specialized labor. However, they must comply with federal regulations such as the Tax Cuts and Jobs Act of 2017, which has provisions affecting the taxation of foreign income and the repatriation of profits to the United States. Additionally, companies must adhere to international trade agreements that the U.S. is a part of, such as the United States-Mexico-Canada Agreement (USMCA), which can impact tariffs, labor standards, and investment rules. While offshoring can lead to cost savings for companies, it may also result in local job losses, which can be a concern for state policymakers. Tennessee does not have specific legislation that penalizes or incentivizes offshoring, but state economic development programs and policies may indirectly influence business decisions regarding offshoring through tax incentives, workforce development, and infrastructure support aimed at making in-state operations more competitive.